Art market datapoint of the day

Law firm Heller Ehrman spent millions of dollars putting together a corporate art collection during the biggest bull market the art world has ever seen, before going bankrupt at the end of last year. Now that art collection is being auctioned off:

The largely contemporary collection is expected to fetch between $610,000 and $1 million in a slow art market, according to bankruptcy papers and the auctioneer hired to conduct the sale…

Martin Gammon, director of business development for Bonhams, acknowledged the art will be going on the block at a time when “the art market is somewhat down from its highs of 2007.” But he said he expected the Heller auctions to be successful.

“In this particular instance, the pieces are post-war and contemporary, which has seen some deflation, but most of that speculation took place at the very high-end of the marketplace, pieces that were selling for hundreds of millions of dollars,” Gammon said. “This is all, I would say, very well selected and well curated material.”

Peter Benvenutti, the chair of Heller Ehrman’s dissolution committee who is now at Jones Day in San Francisco, said he expected the auction to generate “a small fraction of the original cost” of the art, which he said was substantially more than $1 million.

Anybody who claims that art can ever be a good investment should bear this in mind. If anything could have turned a profit, it would be contemporary art which was bought a decade ago and which is being sold now. But no: this collection is worth much less, at auction, than the amount that was paid for it.

If you buy art — especially works on paper — from an art gallery at full retail price, then your chances of being able to ever sell that art at auction for more than you paid are slim indeed. When people talk about art as an asset class, they’re not talking about the kind of art which you see hanging on law-firm walls, or even in suburban homes. They’re talking about a tiny subset of the art world, which you’re not invited to except as a sucker. Caveat emptor.